UPDATE 1-Airbus says India selects its tankers

PARIS Jan 7 Europe's Airbus said on
Monday it had beaten Russian competition to be selected as the
preferred bidder to supply six A330 aerial refueling tankers to
India.

The award paves the way for exclusive talks between Airbus
Military and the Indian government for a deal reportedly valued
at around $1.25 billion.

Airbus had won a previous Indian competition that was
cancelled in 2010 because of Indian government concerns over the
tender's structure and the sales price.

The Airbus A330 MRTT tanker, based on A330 passenger planes,
competed for the deal against Russia's Ilyushin Il-78 air-to-air
tanker, similar to ones already used by the Indian air force.

"Detailed negotiations will now begin, which it is expected
will lead to the award of a final production contract for an
envisaged six aircraft in 2013," Airbus Military said in a
statement.

However, defence experts say the Indian procurement process
can often take longer than this and is subject to surprises.

The Times of India, which first reported the deal, quoted an
unnamed source last week as saying India could have bought the
Airbus tankers at a lower cost but had lost four or five years
due to procurement delays.

The award is a setback for Russia in the lucrative Indian
defence market, once a mainstay of Soviet exports, the newspaper
reported.

India is the fifth nation to select the Airbus tanker, which
also competes on world markets with Boeing 767 tankers.

Britain, Australia, Saudi Arabia and the UAE have also
committed to the Airbus A330, but rival Boeing last year won a
$35 billion U.S. tanker order - by far the biggest - after a
bitter and protracted contest.

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